Until recently the employer was obliged to pay the employee their full salary even if the employee took an unjustified absence from work.

The question of whether the employer must pay the employee’s salary even if the employee does not come to work without a justified reason for their absence has been puzzling employers for quite some time now.

Until recently there was no judgement from the highest court on this issue and both sides of the employment relationship had to rely on the judgements of higher labour courts. The view according to the case law of higher labour courts was that the employer is obliged to pay the full salary compensation to the employee for the time the employee is unjustifiably absent from work.

This view was widely regarded as unjust and unacceptable for employers. The basic question occurring to any employer is why it should pay an employee for work that was not performed even though there is no justifiable reason for not performing it.

Well, the logic represented in the judgements was that the Employment Relationship Act stipulates the reasons for withdrawing payment must be provided by law. Since unjustified absence is not provided by law as a reason for withdrawing the payment, the employer has no legal basis for not paying the salary (compensation) to the employee. This means that the employer must calculate and pay the salary (compensation) to the employee as if they had worked on those days because, despite the unjustified absence, the employee is still in an employment relationship with the employer. The case law further indicated that if the employer did not pay the full compensation to the employee, it would represent a violation of one of the employee’s fundamental rights, i.e. the right to payment. However, on the other side, the disadvantage for the employer is clear: the employer is obliged to pay for work that is not performed.

This issue has finally reached the Slovenian Supreme Court. The Supreme Court allowed a revision in its judgement VIII Ips 206/2018 from 8 October 2019 about the question of whether the employer is obliged to pay the employee when they neither come to work and do not nor justify the reason for their absence.

With this long-awaited judgement, the higher court’s point of view, unjust to many, was changed.

Short case overview

In this specific case, the employee was employed as a dishwasher and the Slovenian Pension and Disability Insurance Institute had decided she had a third-degree disability and should work part-time 5 hours a day. For two and a half years (from 1st January 2012 until 1st June 2014) the employee did not come to work, and did not notify the employer about the reason for her absence. During this time, except for two months, the employee was not on a sick leave. The employer calculated and paid the employee’s social security contributions but did not pay the net salaries. Later, the employee was categorized with first-degree disability and obtained the right to a disability pension. The employer deregistered the employee from the social insurance after this decision was made and the employment relationship was thus terminated.

The question for the Supreme Court to answer

Does the employee have a right to their net salary for the time when they did not come to work if they did not justify their absence?

Court’s explanation

Renumeration for work is one of the fundamental obligations of the employer arising from the employment agreement with the employee and represents a consideration that the employee receives in return for the work performed. The employment agreement is a bilateral agreement in which, on one hand, the employee undertakes to carry out certain work and the employer, on the other, undertakes to pay the employee for the work done. These are the two fundamental obligations that must be mutually fulfilled

The Supreme Court acknowledged that despite the logic above, in certain cases the employee has a right to payment even if they do not perform the work (e.g. sick leave compensation). The employee is entitled to a salary compensation if the employee is absent from work for one of the reasons specified in the applicable regulations.

However, the Supreme Court argued that the labour legislation does not provide for the obligation to pay salary compensation to the employee if the employee takes an unjustified absence from work.

According to the Supreme Court, this would be contrary to the intention of the Institute of Salary Compensation, which represents a social security right stemming from the employment relationship and constitutes a continuous payment in case of justified absence from work. The obligation to pay salaries is not an automatic consequence of the existence of an employment relationship between the parties but constitutes remuneration for work performed (save from above exceptions). The Supreme Court also argued that any reference to the statutory provisions on withholding salaries is not relevant, since the question at hand refers to justification of the salary compensation and not to (un)allowed withholding of salaries.

No work, no pay

The conclusion of the judgement is: if the employee does not come to work without giving any justification, the employee is not entitled to a salary compensation, but only if the reasons for their absence are indeed unjustified.

The employers should bear in mind that if the employee does not come to work without giving justification, but the reasons prove to be justified, then the employee will be entitled to a salary compensation.

Whilst this ruling might be good news for the employers, it remains uncertain how employers are to establish whether the employee’s absence did indeed have no justifiable reason. Employers should therefore handle such cases with caution and ask employees and their medical practitioners to establish whether the absence is justified or not.